36. Manufacturing

In the era of glob­al­iza­tion that took root in the 1980s, with a zeal for cost reduc­tion, Amer­i­can com­pa­nies over­whelm­ing­ly off­shored man­u­fac­tur­ing. This result­ed in the U.S. los­ing a third of its man­u­fac­tur­ing jobs between 2000 and 2010. Tes­la, under Elon Musk’s lead­er­ship, defied this trend. Musk pri­or­i­tized con­trol over the man­u­fac­tur­ing process, empha­siz­ing the impor­tance of the fac­to­ry’s design—“the machine that builds the machine”—as much as the vehi­cle itself. This approach allowed Tes­la to main­tain a com­pet­i­tive edge through con­stant inno­va­tion.

Lar­ry Elli­son, Ora­cle’s founder, likened Musk to Steve Jobs, not­ing both had a ben­e­fi­cial obses­sive-com­pul­sive dri­ve, but Musk extend­ed his obses­sion to man­u­fac­tur­ing, unlike Jobs. This com­mit­ment led Musk to spend sig­nif­i­cant time on the pro­duc­tion floor, con­trast­ing Jobs’ approach of focus­ing on design and soft­ware while out­sourc­ing man­u­fac­tur­ing.

In 2010, seiz­ing an oppor­tu­ni­ty, Musk acquired a Fre­mont, Cal­i­for­nia-based fac­to­ry from Toy­ota for $42 mil­lion, a frac­tion of its orig­i­nal val­ue. This fac­to­ry, revamped under Musk’s direct over­sight, placed engi­neers close to the man­u­fac­tur­ing process for real-time feed­back and prob­lem-solv­ing. This hands-on approach was instru­men­tal when Tes­la went pub­lic in June 2010, a piv­otal moment marked by a sig­nif­i­cant surge in Tes­la’s stock val­ue despite a gen­er­al mar­ket down­turn.

How­ev­er, achiev­ing high pro­duc­tion qual­i­ty was a tumul­tuous jour­ney. Ini­tial­ly dis­sat­is­fied with the pro­duc­tion qual­i­ty of the Mod­el S, Musk’s relent­less pur­suit of excel­lence led to a rig­or­ous focus on root cause analy­sis and the imple­men­ta­tion of a ‘hard­core’ work eth­ic. This dri­ve paid off when the Mod­el S was award­ed Motor Trend Magazine’s Car of the Year in 2012, the first elec­tric vehi­cle to earn this dis­tinc­tion, under­scor­ing Tes­la’s impact on the auto­mo­tive indus­try.

Fur­ther expand­ing his vision, Musk embarked on an ambi­tious project to build the Neva­da Gigafac­to­ry in 2013, aim­ing to sur­pass glob­al bat­tery pro­duc­tion sin­gle-hand­ed­ly. Despite skep­ti­cism, Musk’s strate­gic maneu­ver­ing and part­ner­ship with Pana­son­ic set the foun­da­tion for a $5 bil­lion ven­ture that would cement Tes­la’s role in advanc­ing elec­tric vehi­cle tech­nol­o­gy and man­u­fac­tur­ing inno­va­tion.